BECKLEY— Yesterday’s news that General Motors is going to start paying back their loan is almost laughable. Of course they plan on paying back the $6.7 billion in loans but what about the other $50 billion in investments we put in them? What type of return can we expect as tax payer’s? Obama promised we’d see that money in five years, where are we on that?
After all General Motors is still losing billions of dollars a year. Even after bankruptcy reorganization they’ve lost $1.2 billion between July and September. This mathematical proof of Obama’s arrogance is showing up as pure stupidity. I knew it was a lie the day his administration said they would get a return on their investment within five years.
I had previously calculated the return Obama said he was going to get as 19,799.39%. Six months into this lie what is the return Obama will have to get? Lets do the math.
The stock is now trading on the pink sheets (i.e. over the counter) as it is no longer listed on a stock exchange. GM now trades on the pink sheets as MTLQQ.PK for $0.64 with 610.56 million shares outstanding for a market value of $390.76 million. As I previously wrote, the government owns 60% of General Motors. Investing our $50 billion in General Motors for a 60% share in the company means the stock price has to appreciate to $136.48 per share. This 19,000+% return worked out to an annualized (i.e. yearly return of 187.95%).
Now that we are six months in and the stock price has fallen from $0.69 to $0.64 what is the total and annualized return? The total return Obama now has to acheive is 21,255%. The annualized return he has to achieve is 221.1% to prove that he and his supporters are not liars and fools.
If you are an Obama supporter I know where 100% of your retirement funds are right now. They are with General Motors traded on the pink sheets. And you have lost 4.4% of your money in the last six months. Good luck on buying into that lie.
As for those who use logic and common sense to evaluate the world around us Obama has played the part of the fool. The data is there 1+1=2. Stealing+Lies=Liberal President and General Motors is not going to appreciate 20,000+% in value over the next five years.
TennesseePaul
Stephen VanNuys
Brooklyn Daniel
The Freedom Thinker
The last quarter Ford Motors showed a healthy profit and they had not taken any bailout money – yet you have seen nothing about this in the press. Coincidence?
With the government at the helm General Motors is in for a rough time, I fear.
Well the GM & Buick commercials have become more antagonistic and spiteful (Think Robert Gibbs alluding to Fox News). So that’s something.
lol. Haven’t even read the missive yet, but the title cracked me up.
[...] Original post by The Freedom Thinker [...]
Yes, the post is rather bland just a bunch of numbers really I had to do something with the title…
I like it. But the title made me laugh.
Good post. I’ve been reading articles over the last few months about the number of politicians in Washington, both Dems and Republicans, that have been continuously calling GM executives to tell them to do x, y, and z to save this or that dealership, etc. That is no way to run an efficient, sustainable business.
Beyond the monumental costs and inefficiencies, at some point, the execs are just going to throw up their hands and quit. Good luck replacing them with all the salary caps and regulations, etc.
I would feel sorrow for GM’s predicament, except they flew into Washington, hat-in-hand a year ago and demanded a handout. They are getting what they deserve.
Just to clarify one point: the stock for Motors Liquidation that trades over the counter is NOT stock in the new GM. The new GM will issue stock as part of a future IPO, at which point the U.S. and Canadian governments can chose to sell shares to other investors. There is a fair argument to be made about what these shares might be worth, and how much the taxpayers will recover. But to confuse these shares with those for Motors Liquidation is an error, plain and simple.
For those interested in digging into this, there is extensive financial info on the new GM under the investor tab of the gm.com website.
Yahoo! Finance advised that General Motors previously GM has become MTLQQ.PK. The use of the word “new” GM is what is tricky here and I can understand why you’d be a spokes person as that is a very smooth term to use in this case.
http://finance.yahoo.com/q?s=GM
Further, a description of what MTLQQ.PK is reads as follows:
Oddly enough Motors Liquidation Company has the same CEO as General Motors – Mr. Frederick Henderson.
This is the General Motors Corporation Obama invested in is it not?
I do agree with Tom above that Motors Liquidation is not nor will it be the “new GM” it is IN FACT the old GM in which Obama invested. The new GM will at some time emerge from bankruptcy and presumably as Tom advised release an IPO. Good for them. Will that 60% of that IPO go directly to the U.S. Treasury? If so what about the old investors in GM like Obama that invested in the Old GM now traded as MTLQQ.PK are they going to get the same treatment? Or will the new GM and the Government turn a blind eye to stock holders of MTLQQ.PK and give the government special privileges not afforded under typical bankruptcies. It doesn’t change the fact that the General Motors Corporation (versus what will be the General Motors Company notice the slick change of words Corporation to Company) sucks and that Obama is a fool for investing in it.
Will GM stock now traded as MTLQQ.PK ever be valued at 138 dollars per share? No! It will probably go to zero as we the INVESTORS thanks to Obama and GM have been screwed. What happened to the $50 billion? It’s been effectively washed. It was given to the what is now MTLQQ.PK and probably spent on reorganization and paying off the UAW. Now that it is gone and something new will reemerge what has happened? One company that had spent the money is now another company reorganized.
These shares are valued at .64 they will eventually most likely be valued at zero. Which is my major problem with Obama and GM (the old GM). How will we get our money back?
Will 60% of that [New GM] IPO go directly to the U.S. Treasury?
Now that is a good question. An answer to that perhaps Tom can provide if he knows. I’d love to hear it.
I would assume under the new IPO the initial stock value, per share, would be considerably higher than $0.64. I’m pretty certain that is what everyone at GM is hoping as well.
Paul, it’s not stock value that is important exactly. Even when I invest I don’t look at the price per share. It’s market capitalization versus book value that is what is important.
Market value is share price times total shares outstanding.
The book value of General Motors at December 2008 was negative $86 billion. Even if General Motors in reorganization could eliminate half of their liabilities current and non-current their book value would still be at only 3 billion. Meaning Obama paid $50 billion for $3 billion in value. Not a good idea in the world of investing. Of course the stock like Ford’s which has a Book Value (Dec. 2008) of negative 7 billion has a market cap of $30 billion. Things trade at premiums because one always assumes going concern.
I don’t see how the government even if the market cap gets up to a level of where they could sell the stock and get a break even return could even do it. If the market cap get’s to $100 billion can the government sell it’s 60% stake without the $100 billion falling back to where we loose money – nope. The market cap of GM will have to get up into the trillions in order for the government to feasibly be able to sell. Even Toyota only has a market cap of $2 trillion. In this case the government could sell 60% of 2 trillion and watch the price tumble down and get to a break even but GM will not have a market cap of $2 trillion in 4.5 years.
Tom:
Did the Government infuse capital and debt subsequent to the restructuring effort in which all historical shareholders in the previous General Motors Corporation were wiped out by bankruptcy and former debtholders took investment stake in what will become General Motors Company?
Thanks,
Dallas
Tom: Thank you for reading American Missive and thank you for the clarification. It is very much appreciated. We will keep that in mind and eagerly await the issue of New GM stock from the future IPO.
For the record:
I own a General Motors Chevy Equinox. It is a wonderful SUV. Some of my friends whom I’ve consulted for in the past own one of Chevy’s top selling dealerships nation wide and I don’t have anything against the quality of the cars and the way that these dealerships are run.
I say General Motors sucks because of the way cash has been managed and they’ve allowed themselves to be pushed and bullied by the unions. Especially, now that they are owned by the Government they will suck even more. GM and Chevy make trucks big bad mean trucks. My Equinox was the LARGEST in it’s size for it’s class of SUV in 2006 (the year I own). Here in the mountains of West Virginia it’s no wonder my friends own one of the highest selling dealerships as big trucks are the thing!
Government regulation has forced General Motors to make vehicles like the Aveo, Malibu, Cobalt, etc. These aren’t bad vehicles but compared to the Civic, Fusion, Camry, etc they don’t compete as well (obviously). Just look at the sales data…
What happened to GM’s “We are Professional Grade.” What is professional grade about the Aveo or Cobalt? Not much and this is the EXACT point of “Competitive Advantage” al la famous Harvard father of modern business strategy Michael Porter. You have to focus on something niche something particular. Government regulation doesn’t allow this and the government isn’t going to allow it with modern General Motors either.
“What happened to GM’s “We are Professional Grade.” What is professional grade about the Aveo or Cobalt.”
Nothing in particular, but you also have to look at the fact that large scale SUVs are generally not to popular when gas is at 2.60 much less 4 dollars a gallon.
Poor “perceived” car design is what led GM and Chrysler to their current predicament. Even if they offer better overall cars – people still perceive Toyotas and Hondas as more durable. Hopefully, that all changes one day so we can get some payoff out of this thing.
Tom: the stock for Motors Liquidation that trades over the counter is NOT stock in the New GM. The New GM will issue stock as part of a future IPO
GM Website: General Motors Company (the “new GM”) currently has no publicly traded securities. Please note that none of the publicly owned stocks or bonds issued by the former General Motors Corporation (now renamed “Motors Liquidation Company”), including its common stock currently traded on the Pink Sheets over-the-counter market under the ticker symbol “MTLQQ”, are or will become securities of General Motors Company
The Freedom Thinker: From my understanding of what Tom has stated (which appears to agree with the website he listed), the New GM has not issued public stock and when it does, that New GM stock will not include the pink sheets or previous “old GM” stocks.
Tom: Is that what you are stating?
Yes, I misread that. I deleted my original reply, softened it and re-wrote it.
The whole “new” vs. “old” GM and General Motors Corporation (old) vs. General Motors Company (new) got me confused.
The more important question though is how do those that invested in MTLQQ.PK get their money back (i.e. us taxpayers)? We probably don’t. GM’s taken $50 billion and that’s that.
In the soft words of GM’s spokes person, we taxpayers have a fair argument to be made as to what value the taxpayers investment into GM will be worth. I don’t understand how the taxpayers investment in the old GM will be converted to the new GM under U.S. bankruptcy law.
My argument which isn’t refuted here is that we probably won’t get squat and it appears that is what is hinted at here. Until we find out how investors in MTLQQ.PK like us taxpayers will convert the shares of MTLQQ.PK into “new” GM shares I’ll continue to post on MTLQQ.PK.
If the Government and GM pull a fast one and on IPO launch date only the government get’s 60% ownership and the other owners in MTLQQ.PK are left out (I assume this is what the “new” GM will do to their past stock holders which will make them suck just as bad as the “old” GM because financial it just doesn’t work) that will be a whole other topic in addition to the number of shares and market value of the “new” GM at that time.
Here’s a read on the topic:
http://autos.aol.com/article/new-gm-stock
I’ve been doing some research on this because with Tom’s visit I’ve become more interested in some of the details.
Tom, correct me if I’m wrong again but I understand now that apparently the $50 billion in government investment was done post petition under Bankruptcy code section 365 meaning that capital is infused after petition in order to allow GM to emerge from bankruptcy by using that capital to lower the debt. An IPO or private placement of GM would directly benefit the taxpayers as it would give our investment a value.
I was again wrong in some of my previous comments. Obama did not invest in the “old” GM but in a new post petition GM. The MTLQQ.PK share holders will eventually go to zero and the taxpayer is not among them. We only have to wait and see the IPO quantity and value.
This doesn’t change the fact that I don’t see how GM’s going to give us back our $50 billion in 4.5 years.
Pay me in gum. I love the new Trident Layers commercials. Sorry for my irrelevance. I just figure that is a more likely scenario. Granted, if we keep screwing the dollar’s value over, payment in gum may be preferred.
ha – agreed here.
On this topic of General Motors, all I’ve got to say is that I have no sympathy for a Company that managed to lose 10s of billions in the middle part of this decade, during the height of the biggest automotive bull market in a generation. Those heady days of big-time car sales volumes ain’t coming back anytime soon. And with Congress telling GM they can’t shut down plants and dealerships to reduce over-capacity, there are going to be plenty more rocky roads ahead for this trash-heap of a Company.
I’m a proud owner of a Ford. I use to drive a Chevy, but plan never to buy one again. I’m done with General Motors. Unlike many of the financial companies, which were basically forced by Hank Paulson to take a bailout, GM went to Washington with hat-in-hand.
No sympathy for that.
I buy used not new anyways because it just doesn’t make sense to me to buy new when they lose so much value right away. I just don’t see the cost/benefit when I run the math.
I almost bought a Ford Fusion but the winter’s are rough here and gas prices although expensive aren’t all that bad yet. (It was also pre-bailout as well). Maybe if they closed in on 8 buck and my gasoline expense jumped up from $400 monthly to $800 monthly then it may become a deal but I liked the Equinox it drives like a car with all-wheel drive lots of space for when I have all four kids, diaper bags, 5-star crash test, etc.
As for the management of GM. If they don’t pay that money back they should have their wages garnished and individual bank accounts seized. But that is true for the banks, congress and the President as well. They’ve robbed the American people at gun point and are nothing but criminals. GM, Bank of America, Paulson, Pelosi, and Obama are by the pure definition of the term – thieves. They have STOLEN from the American people for their OWN personal interest. GM in no way can prove much less even make a half way decent argument that giving that $50 billion investment is good for America as a whole it is good for them and their employees/UAW.
As the spokes person has basically stated here already there is a good argument to be made as to the “value” of the taxpayers investment. We’re six months in to what we were told at gunpoint would be a 5 month pay back. I didn’t buy it then and I don’t buy it now.
GM went into bankruptcy with a book value of NEGATIVE $86 billion they’ll be lucky to emerge with a positive book value at all. They’ve lost another billion dollars since June. They can’t even in bankruptcy cut costs enough to get to break even. Indeed Mr. Wilkinson is right when he says the value of that $50 billion is in question.
“Unlike many of the financial companies, which were basically forced by Hank Paulson to take a bailout, GM went to Washington with hat-in-hand.”
Ultimately, financial companies took the funds too. They can blame it on Hank, but that is BS in my opinion as well. They could have easily fought it in the media and grandstanded – maybe the average American might feel some pity for them.
Don’t give these jackasses a free pass Stephen. They could have stood on principle for the free market and they ultimately capitulated whether by force or not. They would have been respected if they would have come out in the news at that time.
I live in Canada and share the same disdain for the loosely termed “investment’ that my government has made lock step with the Obama administration in GM. Our infrastructure is crumbling, troops are ill equipped and the list goes on where the GM money should have been spent. The only recourse I have is to never buy a GM car again.
In my family, circle of friends and amongst my co-workers there is always someone needing a car. Not one of these people would even consider a GM vehicle now or in the future and the common reason is the bailout. GM is going down and it’s only a question of when.
[...] on the egg they have on their face from putting him in the CEO spot to begin with! As I’ve written time and again our money has been happily flushed down the drain for political votes from labor unions. I [...]
[...] 15, 2009 by The Freedom Thinker BECKLEY — I’ve been pretty rough on General Motors Company because of their asking for and taking my money from me using the [...]
[...] Mr. Obama has invested heavily in two American auto companies after being elected. The unions of these auto companies invested heavily in getting Mr. Obama elected. With that the US Government, by direction of Mr. Obama, purchased both Chrysler and General Motors out of bankruptcy with massive loans. It represented a huge investment by the US Government. An investment which will probably never be rewarded or re-payed. [...]